The Billionaire Paper Chase

By Robert Frank

The Chicago Tribune today has news this morning that commercial-property magnate Sam Zell is eyeing a deal for the paper’s parent company, Tribune Co.

Mr. Zell, who’s about to have a massive liquidity event after selling Equity Office Properties Trust for more than $23 billion, is clearly looking for places to put his cash to work. While he hasn’t made any offers for the paper yet, the Tribune says today that Mr. Zell has made a “complicated proposal that may include taking an equity stake in the company while adding debt to fund a large dividend for shareholders.”

The deal follows similar overtures from other moguls. Los Angeles billionaires Ron Burkle and Eli Broad have lobbed in a similar offer to Mr. Zell’s for Tribune, though nothing’s come of the offer. Meanwhile, billionaire David Geffen has expressed interest in the Los Angeles Times, while former G.E. chief Jack Welch has floated the idea of putting together a team to buy the Boston Globe.

Many in the newspaper industry have hailed billionaire bidders as saviors. Yet there are reasons to be wary. First, billionaires got to be billionaires by extracting value and running tight businesses — not by donating money to declining industries. Second, owners will be owners, so any suggestion that the billionaire buyers would pay up and leave their new papers alone is wishful thinking.

Finally, despite the rise of the Internet and other sources of news, the billionaires (most of them older) likely see newspapers as important PR vehicles and influence tools, rather than as icons of a free press. Even with all his newfound cash, Sam Zell is still going to demand a maximum return — whether that return is financial or social.

Comments (1 of 1)

The only way newspapers will survive is to stop being left-wing propaganda machines. The number of people who want a steady diet of left-wing propaganda is rapidly diminishing. That leaves 70% of the market that hates their product. No company can survive with negatives like those.

There are two types of billionaires. Propagandists like Gefen who want to keep the propaganda machines running no matter what it costs. And the reformers who will fire the corrupt editors and reporters and replace them with people who are interested in reporting the news.

The propagandists will fail, and the reformers might succeed.

About The Wealth Report

The Wealth Report is a daily blog focused on the culture and economy of the wealthy. It is written by Robert Frank, a senior writer for the Wall Street Journal and author of the newly released book “THE HIGH-BETA RICH.”